By Giddings, Brimer H.B. No. 3008
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to loan fees charged by a bank.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Article 8, Chapter V, The Texas Banking Code
1-5 (Article 342-508, Vernon's Texas Civil Statutes), is amended to
1-6 read as follows:
1-7 Art. 8. LOAN FEES. (a) A bank may require a borrower to
1-8 pay all reasonable expenses and fees incurred in connection with
1-9 the making, closing, disbursing, extending, readjusting, or
1-10 renewing of a loan, regardless of whether those expenses or fees
1-11 are paid to third parties. A fee charged by the bank under this
1-12 section may not exceed the cost the bank reasonably expects to
1-13 incur in connection with the transaction to which the fee relates.
1-14 Payment for these expenses may be collected by the bank from the
1-15 borrower and retained by the bank or paid to a person rendering
1-16 services for which a charge has been made, or the payments may be
1-17 paid directly by the borrower to a third party to whom they are
1-18 payable. This section does not authorize the bank to charge its
1-19 borrower for payment of fees and expenses to an officer, director,
1-20 manager, or managing participant of the bank for services rendered
1-21 in the person's capacity as an officer, director, manager, or
1-22 managing participant.
1-23 (b) A bank may charge a penalty for prepayment or late
1-24 payment. Only one penalty may be charged by the bank on each past
2-1 due payment. Unless otherwise agreed in writing, prepayment of
2-2 principal must be applied on the final installment of the note or
2-3 other obligation until that installment is fully paid, and further
2-4 prepayments must be applied on installments in the inverse order of
2-5 their maturity.
2-6 (c) Notwithstanding any statute to the contrary, fees and
2-7 expenses charged and collected as provided by this section are not
2-8 considered a part of the interest or compensation charged by the
2-9 bank for the use, forbearance, or detention of money.
2-10 (d) To the extent of any conflict between this article and
2-11 Subtitle 2 or Chapter 15, Title 79, Revised Statutes (Article
2-12 5069-2.01 et seq., Vernon's Texas Civil Statutes), the provision of
2-13 Title 79, Revised Statutes, prevails. <PROHIBITED--EXCEPTION. No
2-14 bank shall charge or collect any loan fee or any other charge, by
2-15 whatever name called, for the granting of a consumer loan unless
2-16 authorized by law. Provided, however, a bank may require an
2-17 applicant for a loan or discount to pay the cost of any abstract,
2-18 attorney's opinion or title insurance policy, or other form of
2-19 insurance, and filing or recording fees or appraisal fees.
2-20 Expenses necessary or proper for the protection of the lender, and
2-21 actually incurred in connection with the making of the loan may be
2-22 charged. In all consumer loan transactions in which the amount
2-23 loaned is $100 or more and the loan period is one month or more, a
2-24 bank may charge any borrower the reasonable value of services
2-25 rendered in connection with the making of any loan, including the
2-26 drawing of notes, the taking of acknowledgments and affidavits, the
2-27 preparation of financial statements, and the investigation or
3-1 analysis of the financial responsibility of the borrower or any
3-2 endorser, surety or co-signer, in an amount agreed upon, but not to
3-3 exceed $15 for each loan transaction. If the amount that the bank
3-4 charges for those services exceeds $15, the amount of interest
3-5 contracted for shall be forfeited. No bank shall induce or permit
3-6 any person, or husband and wife, to be obligated directly or
3-7 indirectly under more than one loan contract under this article at
3-8 the same time for the purpose, or with the effect, of obtaining a
3-9 higher authorized charge than would otherwise be permitted. The
3-10 charge authorized herein shall not apply to any renewal or
3-11 extension of an obligation on which the charge has been previously
3-12 imposed; provided, however, that such renewal or extension may bear
3-13 interest at the rate that is otherwise provided by law. The charge
3-14 shall not apply to a loan transaction wherein the borrower applies
3-15 all or a portion of the loan proceeds to discharge a prior loan
3-16 made by the same lender to the same borrower and in connection with
3-17 which the above charge was imposed. To the extent of any conflict
3-18 between this article and a provision of Chapter 2, 3, 4, 5, 6, 6A,
3-19 7, 8, or 15, Title 79, Revised Statutes (Article 5069-2.01 et seq.,
3-20 Vernon's Texas Civil Statutes), the provision of Title 79, Revised
3-21 Statutes, prevails.>
3-22 SECTION 2. This Act applies only to the making, closing,
3-23 disbursing, extending, readjusting, or renewing of a loan occurring
3-24 on or after the effective date of this Act. If one of those acts
3-25 occurs before the effective date of this Act, the act is covered by
3-26 the law in effect when the act occurred, and the former law is
3-27 continued in effect for that purpose.
4-1 SECTION 3. This Act takes effect September 1, 1995.
4-2 SECTION 4. The importance of this legislation and the
4-3 crowded condition of the calendars in both houses create an
4-4 emergency and an imperative public necessity that the
4-5 constitutional rule requiring bills to be read on three several
4-6 days in each house be suspended, and this rule is hereby suspended.